Can Twitter predict the economy?

Tweets about job loss can be used to predict unemployment claims.
Tweets about job loss can be used to predict unemployment claims.
Image credit: Twitter.com

Can Twitter predict the economy? According to economists at the University of Michigan, it might be able to—at least when it comes to unemployment claims.

The Wall Street Journal shared an report produced by the school, based off a proprietary technique called “nowcasting” that scans Twitter for posts about people losing their jobs, and then predicts what the Labor Department’s weekly unemployment report will look like.

The algorithm can pick up on tweets that hint at job loss—if someone posts that they were just laid off, for example—and then tallies up those tweets as part of their prediction. According to the data produced so far, the predictions made via Twitter data are not far from the predictions offered by economists, though the data procured via the social media site tends to skew dour.

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Seems like one person’s tweet is another professor’s experiment (and yet another reminder that what we post on social media lives forever).